Nick Janetos and Jan Tilly, two economics researchers from the University of Pennsylvania, have set out to uncover how buyer and seller reputation impacts online markets. The recent Ph.D. graduates, who dedicated their time as doctoral candidates to researching the subject, are currently investigating the rating systems of various marketplaces, specifically of those on the darknet.

When transacting on darknet marketplaces, as opposed to transacting on surface websites like Amazon and eBay where buyers and sellers can take steps should they encounter fraud, darknet marketplace users have very little recourse for such crimes.

These markets exist outside the court system, so it seems like reputation really should be a thing that keeps them going,” Janetos says. “What we’ve done is we’ve collected a rich data set of sellers, behavior, prices charged, and who’s buying from them, and we formally investigated it using a new statistical model. We found that, in fact, reputation is extremely important: If it weren’t for this information that the market platform is providing in terms of ratings, they would completely collapse. They wouldn’t even exist.

— Nick Janetos, Ph.D., University of Pennsylvania

The researchers faced a variety of challenges, including determining how to statistically represent peoples' beliefs about ratings and what ratings mean. While the duo is excited to continue to learn the ins-and-outs of darknet ratings systems, and compare and contrast these with surface web ratings systems, Janetos believes that figuring out what keeps various pieces of the darknet going could also help law enforcement.